Expensive Bidding for Cheaper Online Items

Anybody know where you can spend $67.92 on a 40-inch Samsung TV that normally sells for $1,500? Executives at Entertainment Shopping, a German company, do.

Swoopo, an online auction site owned by Entertainment Shopping has been offering items at extremely low prices compared to competitors, except there is a catch. Every time a user bids on an item, the user is charged 60 cents. The bidding costs certainly add up, and after the item is sold, Swoopo makes a nice profit. Although the bidding costs are non-refundable, last month Swoopo began allowing American users to apply previous bidding costs on a particular item towards buying that item full price on their website. Swoopo's retail prices, however, are notoriously high.

To combat online auction sanctity that sites like EBay seem to have lost from the proliferation of automated bidding software, Swoopo adds seconds to the bidding clock every time a bid is made. This prevents users from bidding at the last possible second to win, a plague that has damaged EBay's reputation.

Swoopo's online auction tactics have inspired the creation of other small online auction start-ups like GoBid, Rockybid, and Project Fair Bid. August Capital, a Silicon Valley venture capitalist firm recently invested $10 million in Swoopo's owner Entertainment Shopping to help expand the company.